Wilianto looks at the CPO sector and he continues to advise clients to overweight Indo plantation and re-initiates Malaysian plantation sector with an overweight. Yes, Wili now has extra responsibility to cover Malaysian CPO sector.
We suspect that Wili wants to spend more time for his 3 true loves: (1) Wili’s wife is Malaysian and he wants to explore the side of his wife’s family further (2) Wili’s love for plantation (3) his love for Malaysian FOOD, including durian and Malaysian-style kwe tiaw (I like it too…)
The key points from his report:
Both CPO and soybean supplies are tight. CPO supply remains tight (poor harvest + bad weather) supply is just as tight after poor harvest in Argentina.
Strong production in 2H09 is priced in. Any sign of supply disruption will send CPO price even higher.
Palm oil production needs to pick up by 25% to replenish Malaysian inventory to 2m tons. This might not happen as farmers cut down fertiliser usage last year (impact is 12 month lagging).
Risk: US soybean planting exceeding intention to plant (flat acreage yoy). However, as inventory is low.
In Indonesia, Wili has BUY calls on Lonsum (LSIP IJ) and Sampoerna Agro (SGRO IJ).
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